Higher rental income and continued low interest expenses generated a profit from property management of SEK 449m, which is the equivalent of an increase of 10 percent compared to the previous year.
During the quarter, growth in value continued both in the management portfolio and in projects. Including acquisitions, Fabege now has property value in excess of SEK 52bn. Growth in value of SEK 1,156m (1,199m) was driven primarily by higher rent levels and projects, but also a slight continued decline in yield requirements.
Rental income amounted to SEK 1,108m and the profit after tax for the period was SEK 1,998m, the equivalent of SEK 12.10 per share. Profit before tax for the period amounted to SEK 2,592m, compared to SEK 3,115m the previous year. The decline is entirely due to unrealised changes in the value of the property portfolio having decreased during 2017.
Fabege started two new projects during the quarter, and both are fully let. Båtturen 2 in Hammarby Sjöstad with its 5,200 sqm is estimated to be completed during the second quarter of 2019. The investment amounts to SEK 170m, and the building has been planned for environmental certification to BREEAM-SE level Very good. The building has been let to Goodbye Kansas on an 8-year lease.
Fabege and the City of Solna have also agreed on the construction of a school, a preschool and a sheltered accommodation with six apartments – comprising 5,100 sqm in total in Råsunda in part of the Lagern 2 property. The investment amounts to SEK 140m, and the building has been planned for environmental certification according to BREEAM-SE level Very good. The entire space has been let to the City of Solna on a 20-year lease.
“We are well-equipped to take advantage of the current positive market conditions. Our projects continue to deliver at a high level – yield on capital invested during the first six months of the year was 54 percent. As project properties are completed and tenants move in, we are beginning to see the positive effects of the increased cash flow in our income statement. With a committed organisation and considerable potential in our market and our property portfolio, I look forward to continued favourable development in 2017 and 2018,” comments Christian Hermelin, CEO at Fabege.
Fabege AB (publ)